SAP FI/CO – New General Ledger accounting

mySAP ERP
ERP Central Component (ECC) 6.0 Version
New General Ledger Accounting – Training Purpose

The purpose of the training is to impart detailed

functional overview and configuration steps in New
General Ledger accounting
New General Ledger Accounting - Agenda

Date 19.02.2009 & 20.02.2009

Sl. No. Topics
1 Overview on New GL accounting
2 New GL activation concept
3 Real time integration of CO with FI
4 Document splitting concept
5 Parallel ledger concept
6 Segmental reporting and New GL Assessment

7 Quiz
8 Hands on training
9 New GL Migration - an overview
10 Changes in ECC 6.0 version from earlier version
11 Report Painter - an overview
1. Overview on New GL Accounting
New General Ledger Accounting - Foreword

The increased demands on general ledger accounting requires new architecture

concepts for today’s business software. The following list contains some of the aspects
determining the range of functions required of modern, forward-looking general ledger
accounting:

• Standardization of International accounting principles

• Necessity of quicker period-end closing
• Simultaneous implementation of company-specific and industry-specific
reporting requirements
• Cost reduction
• Increased Data transparency
• Greater convergence between financial and management accounting

SAP set out to meet these requirements, and New General Ledger Accounting in
mySAP ERP is the result incorporating all of the above points.
New General Ledger Accounting - Advantages

Management
Reporting
Segment
Reporting Extensibility

Legal Entity Balanced Books

Reporting in any Dimension

Parallel
Compliance Accounting

Transparency Fast Close

Total Cost of
Ownership Reduction
New General Ledger Accounting – G/L in SAP R/3 Enterprise
and mySAP ERP

Multiple Applications – SAP R/3 mySAP ERP: A Unified World

General Ledger in mySAP ERP
Classic GL CoGS General Ledger supports
Legal Ledger
Requirements Legal Requirements
Mgmt. and Segment reporting

Profit Center Ledger Extensibility by Industries

Management and Extensibility by Customers
Segment reporting
Balanced book by any dimension
Parallel sets of books
Special Ledger Fast Close
Multi-dimensional,
Customer-defined TCO reduction

Intl. Accounting Standards

Industry Specific Ledgers Compliance & Transparency
B/S by Grant, Fund, Title …
New General Ledger Accounting – Advantages

Business Requirement New GL Functionality

1) Reporting as per different GAAP Concept of multiple ledgers - Leading &

(GAAP = General Accepted account principles ) Non leading ledger

2) Unified management and legal

Profit center integrated with GL
reporting

3) Segmental reporting as per US Segment defined as an enterprise

GAAP element

4) Financial statements below Document split functionality - Profit

company code level center level, segment level reports
mySAP ERP – Evolution history
Evolution History of SAP R/3 to mySAP ERP:

• SAP R/3 Release 4.0B Release Date June 1998

• SAP R/3 Release 4.5B Release Date March 1999
• SAP R/3 Release 4.6B Release Date Dec 1999
• SAP R/3 Release 4.6C Release Date April 2001
• SAP R/3 Enterprise Release 4.70 Release Date March- Dec 2003
• mySAP ERP 2004 (ECC 5.0 version) – 2003 to 2004
• mySAP ERP 2005 (ECC 6.0 version) – 2004 to 2005

A complete architecture change took place with the introduction of mySAP ERP edition in
2004. R/3 Enterprise was replaced with the introduction of ERP Central Component (SAP
ECC). The SAP Business Warehouse, SAP Strategic Enterprise Management and
Internet Transaction Server were also merged into SAP ECC, allowing users to run them
under one instance. Architectural changes were also made to support an enterprise
services architecture to transition customers to a services-oriented architecture.
mySAP ERP – Architecture
mySAP ERP Architecture – ECC 6.0 version
mySAP ERP – Next Generation ERP Solution
mySAP ERP Architecture - Netweaver technology

- Netweaver is SAP’s integrated technology platform and is the technical foundation for
all SAP applications. SAP NetWeaver’s release is considered as a strategic move by
SAP for driving enterprises to run their business on a single, integrated platform that
includes both application and technology.

- Netweaver is essentially the integrated stack of SAP technology products. The SAP
web application server is the run time environment for the SAP applications including
the mySAP Business Suite solutions (ERP, SRM, SCM, CRM and PLM)

- It is widely held that this approach is driven by Industry’s need to lower IT costs
through an enterprise architecture that is at once
a) More Flexible,
b) Better integrated with applications
c) Built on open standards to ensure future interoperability and broad integration
mySAP ERP Architecture - mySAP Business Suite
mySAP ERP ECC 6.0 – Technical Overview – Fast
Facts
SAP R/3 Enterprise 4.7:
151,600 Tables & 75,000 Transaction codes (approx)

mySAP ERP ECC 6.0:

309,300 Tables & 105,000 Transaction codes (approx)

Three news tables added in new GL accounting namely:

• FAGLFLEXT: It replaces table GLT0. With this table, many scenarios can be
portrayed. Definition of own customer fields can be possible.

• FAGLFLEXA & FAGLFLEXP: General ledger oriented or ledger specific line items
for both actual and plan items. It contains additional information used in the entry
view in BSEG table.

• BSEG-ADD: Used in particular in connection with the ledger approach to portray

parallel accounting.

***Plus, lots of BAPI’s, BADI’s and User Exits are added in ECC 6.0 version.
2. New GL Activation Concept
New GL Activation concept

Activation Details

a) Activation of New General Ledger accounting

b) Activate / Deactivate old customization paths

c) Update / Read from Classic General Ledger

New General Ledger – Activation Concept

Path: Customization -> Financial accounting -> Financial accounting global

settings -> Activate new GL accounting (Or) Transaction code: FAGL_ACTIVATION
New General Ledger – Activation Concept

Notes:
a) The new general ledger is activated automatically in initial installations.

b) If existing customers want to use the new general ledger, they have to activate
it using a Customizing transaction or through FAGL_ACTIVATION.

c) The activation flag is set in each client.

d) Activating new general ledger will result in system-wide changes to the

application menu and screens and customizing paths
New GL accounting – Menu path after activation

- The paths for the new general ledger accounting are in addition to the existing
Customizing paths.
- The conventional Financial Accounting paths will initially remain available in their
present form.
New GL Accounting – Activate/Deactivate Old IMG

Program name: RFAGL_SWAP_IMG_OLD (in SE38 T.Code)

New GL Activation – Update / Read from Classic
General ledger

• Overview:
This section is applicable for clients who migrate from classic GL to New GL. By
Default, after activation of the new General ledger, the reports only read the
tables for the new general ledger accounting – the “Read from Classic general
ledger” flag is not set.

In order to read the tables for classic general ledger accounting also (=> table
GLT0), select the checkbox “Read Classic General ledger (GLT0)”. Path and
screenshot mentioned in the coming slides.

• SAP Recommendation:
Any update of the Classic General Ledger tables should be deactivated after
running and verifying the first end-of-period closing, at the latest. If we update
the tables of both the conventional and the new general ledger, then too many
unneeded data records will be generated.
New GL Activation – Update / Read from Classic General ledger

Path: Customization -> Financial accounting (New) -> Financial accounting

global settings (New) -> Tools -> Deactivate update of classic general ledger
(GLT0).
New GL Activation – Update / Read from Classic General ledger
3. Real Time Integration of CO->FI
Real Time Integration of CO with FI

Activation details

a) Defining Variants for Real Time Integration and assign variants to

Company code

b) Real Time Integration – Trace / Log – an overview

c) Account determination for Real time integration – with / without

substitution rule
Real Time Integration of CO with FI

FI Module CO Module
Earlier Version

Month end Integration

FI Module CO Module
New Version

Real Time Integration

Real Time Integration of CO with FI - Advantages
Overview:

The real time integration from financial accounting (FI) to controlling (CO) has been available
so far, but the opposite direction from CO to FI was not available in real time in earlier versions
and it requires reconciliation ledger postings to be run through transaction code KALC during
month end.

This month end procedure can be eliminated once we activate real time integration of CO with FI.
Real Time Integration of CO with FI – Activation Path

Path: Customization -> Financial accounting (New) -> Ledgers -> Real time
integration of Controlling with Financial Accounting
Variants for Real Time Integration CO->FI
Variants for Real Time Integration CO->FI
It consists of:

a) The criteria for real-time integration mainly, cross-company code, cross-business area,
cross-functional area, cross-profit center and cross-segment etc.,
b) The activation date for the real time integration and assignment to Leading ledger 0L.
c) Setting up account determination for real time integration.

Real Time Integration CO->FI – Trace / Log:

If necessary, the CO-FI real-time integration can be logged with a trace. If trace is active
during a CO posting, we can analyze the real-time integration data again at any time –
including the following data:
a) The document number of the original CO document
b) Whether it was a transfer or a test run.
c) The document number of the follow-up document in FI if a transfer to FI took place.
d) The reason for transfer, but also the reason for a failed transfer.
d) The posting mode: online posting or subsequent transfer (subsequent posting / follow-up).
e) Posting date, posting time, and user.
f) Line item data for the documents: - All posted to objects and partner objects.

Note:

We can activate the trace in the real-time integration variant, it is then active for all users at all
times. We cannot deactivate it subsequently. As per SAP, that this may result in a significant –
potentially undesired – number of log entries.
Assignment of Real time Integration variant to
Company code
Trace log activation - T.code FAGLCOFITRACEADMIN

Note: If the trace is not activated in the real-time integration variant as above,
it can still be activated and deactivated user-specifically at any time using this
transaction code.
CO-FI Real Time integration - Example

Manual reposting of costs from one cost center to another cost center
Accounting -Controlling -Cost Center Accounting -Actual Postings -Manual Reposting of Costs -KB11N - Enter
Account Determination for Real Time Integration
Two options are available for Account determination, namely:

a) Account determination without substitution

b) Account determination with substitution

Both the steps are mainly used to trace and analyze postings in financial accounting by a
Designated value (Example: assigned GL account through account determination)

Option 1: Account determination without substitution:

This step is used to define the account determination for the real time integration of controlling
(CO) with financial accounting (FI) based on the below combinations:
• GL Account for reconciliation postings (Example: GL account 6900000005)
• GL Account for reconciliation postings along with CO Business transaction.
(Example: Business Transaction: RKU1 (repost costs) with GL account 6900000005)
• GL Account for reconciliation postings along with CO Business transaction and CO Object
class
(Example: Business Transaction: RKU1 (repost costs), Object class: OCOST (Overheads)
with GL account 6900000005)

Option 2: Account determination with substitution – Extended Account determination

Similar to FI substitution through OBBH transaction code; during real time integration of CO
with FI, this method replaces the original value in FI with the substituted value during
accounting document creation.
Account Determination without Substitution

Path: Customization -> Financial accounting (New) -> Financial accounting global
settings (New) -> Ledgers -> Real time Integration of Controlling with Financial
Accounting -> Account determination for real time integration -> Define account
determination for real time integration.
Account Determination without Substitution
Account determination without Substitution - Example

Example: Cost center reposting from Cost center N0011003 (Administration cost center)
to N0011002 (Services cost center) through cost element 6003002001 for INR 15,000. As
per the account determination, accounting document will be created using 6900000005
GL account and not through 6003002001 GL account.
Account determination with Substitution
Substitution rule - Example
Example: As per this substitution step, whenever there is any transfer posting in CO
using cost element 6003002002 which initiates real time integration with FI, during
accounting document creation, it will be replaced with the GL account 6900000004.
Account determination with substitution - Example
Example: Cost center reposting from Cost center N0011003 (Administration cost center)
to N0011002 (Services cost center) through cost element 6003002002 for INR 17,000. As
per the substitution method, accounting document will be created using 6900000004 GL
account.
4. Document Splitting Concept
New General Ledger – Document splitting
Overview

Earlier Version

New Version
 New General Ledger – Document splitting
Overview
Overview:

Accounting documents contain accounts (such as revenues or expenses) that carry

account assignments like cost center, profit center etc., Such accounts serve as the
basis for providing account assignments to dependant accounts (such as accounts
payables or receivables, tax, for example) according to context (such as invoice or
payment).
In short, splitting procedure defines how and under which circumstances document splits
will be performed.

Document splitting views:

When new general ledger accounting is active, a financial accounting document always
has two views, namely
- Entry view: View of how a document also appears in the sub ledger views /
sub ledgers (AP / AR / AA )
- General ledger view: View of how a document appears (only) in the general
ledger.
Document splitting – Example (1) – Active splitting

This entry shows how expenses account’s cost center and its relative profit center is
automatically derived into the vendor account through online active splitting
functionality
Document splitting – Example (2) – Passive splitting

This is the payment entry for the previous vendor invoice. Even though, no profit
center provided to the Bank or vendor account during payments, but it derives the
profit center from the vendor invoice and will be updated in the GL view.
Document splitting – Example (3) – Zero balance clearing
This entry shows how the accounting document will be splitted in GL view when there is a
different CO object (cost center) in debit and credit entry. Zero balance clearing account
(which will be provided in the customization) will be debited and credited with the same
amount, mainly to zero-wise each of the profit center’s balance and also to have a
complete accounting entry for each profit centers.
Major Steps involved in Document Splitting – Overview
Document splitting – Customization details
1) GL Account classification based on standard Item categories

2) Classification of document types for document splitting

3) Define Zero balance clearing account – mainly to provide entity wise balance for
each document

4) Document splitting characteristics for GL account

5) Document splitting characteristics for Controlling

6) Post capitalization of cash discount to assets

7) Definition of constants – mainly to provide default business area, profit center

etc.,

8) Activation of Document splitting

9) Definition of Extended splitting – Splitting Rule, Business transactions and its

variant
1) GL Account Classification
• Overview:
The first step to customize document splitting is to classify the GL accounts.
Classification of the GL accounts is the process to assign GL accounts to an item
category. SAP provided standard item categories by default. With the classification of
GL accounts, document splitting recognizes how the individual line items are handled.

• Purpose:
Each GL account will have its unique importance, based on its statement type
whether its P&L or Balance sheet, and based on reconciliation account types like A,
D, K, S etc., In order to have the same importance during document splitting, SAP
lists whether this particular GL account belongs to Asset or Customer or Vendor or
Special GL transactions or Expense or Revenue or the normal Balance sheet item
based on Item categories.

Depending upon this item category assignment to the GL account, document will be
splitted based on account assignments like cost center or profit center etc. during
transaction processing. This configuration is global in nature and has to be carried out
in coordination with Chart of accounts design for implementation. It will not be
possible to change item category assigned to an account after postings to an account
(Refer SAP OSS note 891144 – Risk of subsequent changes). This configuration
should be included as a post-processing step whenever any new account is created
in COA post implementation.
GL Account Classification – standard Item categories

Item Categories Description

1000 Balance Sheet Account

2000 Customer

2100 Customer: Special G/L Transaction

3000 Vendor

3100 Vendor: Special G/L Transaction

4000 Cash Account

5100 Taxes on Sales/Purchases

5200 Withholding Tax

6000 Material

7000 Asset

20000 Expense

30000 Revenue
2) Classify document types for document splitting

Overview:

Each document type will have its unique importance based on vendor invoice,
payments, customer invoice, GL account direct journal entry, asset related
document types etc. Similar to that, SAP provides the business transactions
and variant in document splitting, which mainly classifies whether splitting
needs to be done in line with vendor invoice, payments, customer invoice,
balance sheet postings etc.,

Depending upon the characteristics of the document type, it needs to be

assigned to the business transactions and variant.

Note: If a new document type has been created, immediately it has to be

assigned to the business transaction and variant for document splitting,
otherwise it would throw an error during transaction entry.
Document splitting – Classify document type for document
splitting
3) Document Splitting – Define Zero balance clearing
account
• The zero balance indicator setting, ensures that the document is balanced
according to document split characteristics for the selected dimensions such
as Business area, Profit center and Segment etc.,

• In case the balance of account assignment objects is not zero after

document splitting the system generates additional clearing items.

• The triggered line items in the document are posted to the zero
balance clearing account defined for each account key in customizing
(transaction code: GSP_KD1).

• Therefore, a clearing account has to be created for the additional clearing

line items.
Document Splitting – Define Zero balance clearing account
4) Document splitting characteristics for GL Account

Overview:

This step mainly shows about three main document splitting fields namely,
Business Area, Profit center and Segment and its relative selection for Zero
balancing and Mandatory field during transaction processing.

Zero Balance checkbox:

To ensure balance of the involved entities like profit center, segment is always
‘0’ for every posting, ensuring ‘entity balancing’.

Mandatory flag checkbox:

It is an extension of the field status for accounts in which the characteristics

cannot be “entered” during document entry and that cannot be controlled
through the field status. Example: Vendor lines should always include a profit
center or a segment. It is a check as to whether business process equivalent
business transaction variant is selected (which determines whether a splitting
can be found)
Document Splitting Characteristics for GL accounting
5) Document Splitting Characteristics for Controlling
Overview: Similar to document splitting characteristics for General ledgers, document splitting
characteristics for CO objects like Cost center, Internal Order, WBS element can to be
provided. Based on this, during transaction processing (example payments), it will refer the
original transaction (example invoice), and derive the cost center from the invoice and update
in the payment document.

Example: Passive split for Cost center – Foreign vendor invoice with payment
Vendor Invoice: Debit Expense account with cost center and credit Vendor account.
Payment entry: During payment entry, if there is any expense account like “loss on foreign
exchange”, the same cost center updated in expense account during invoice entry will be
updated in Loss on foreign exchange GL account.
Document Splitting Characteristics for Controlling –
Example
Foreign vendor invoice and subsequent payment
Document Splitting Characteristics for Controlling –
Example Contd.

Foreign vendor invoice and subsequent payment

6) Document splitting – post capitalization of cash
discount to assets

The activation of the "Post-Capitalization of Cash Discount to Assets" has the

effect that the cash discount of an asset-relevant payment is not posted to the
cash discount account, but directly to the asset.
Post capitalization of cash discount to assets –
Example
Vendor Invoice and subsequent payment with Discount
Post capitalization of cash discount to assets –
Example Contd..

Vendor Invoice and subsequent payment with Discount

7) Document splitting – Defining Constants
Document splitting – Defining constants – Example

Example: Transfer of amount from one vendor account to another vendor account.
Even though no account assignments made during vendor transfer, it would take
the default account assignments from the “constants” in customization
8) Document splitting - Activation

Overview:

Splitting is first activated Client-wide in Customizing. In a subsequent step, we can activate /

deactivate splitting in each company code.

Default Splitting method provided by SAP – 0000000012. It can copied and make necessary
changes if required.

Inheritance:

It means when we create a customer invoice with a revenue line item, for example, the entities
(such as business area or profit center or segment) are projected (inherited) to the customer
and tax lines in the general ledger view. Same is the case for Passive split as well.

Default account assignment:

The default account assignment can be used to replace all account assignments that could not
be derived from the posting with a constant “value”.
Document splitting activation with / without constants
Document splitting activation with / without constants

Click Deactivation per company code and ensure “Inactive status checkbox has
not been selected
9) Extended Document splitting method
• Overview: It includes assignment and activation of splitting method, Splitting rule,
Business Transaction and variant, Item category and base item category.

• Customization path: Customization -> Financial accounting (New) -> General Ledger
accounting (New) -> Business Transactions -> Document Splitting -> Extended Document
Splitting

• Splitting method: It defines how the document splitting is performed based on the splitting
rule assigned to the splitting method. Standard splitting method is 0000000012. If
necessary, copy the standard splitting method and create a new splitting method and make
necessary modifications in the copied splitting rule depending upon the business
requirement.

• Splitting Rule: Consists of assignment of Business transactions and its variant.

• Business Transactions: It’s a summation of all the characteristics of a typical business

process. SAP delivers standard 10 business transactions and its permitted item categories.

• Business Transaction variant: Special set of characteristics for a business transaction. It

can be used to restrict further the item categories specified in the business transaction.
SAP also delivers standard business transaction variant for the business transactions.

• Item categories: It characterizes the items of an accounting document. It is in line with the
GL account’s account type like vendor, customer, asset, GL account etc.
Document splitting method – Standard Splitting Rule
Document splitting – Standard Business transactions
Document splitting Methodology
Document splitting process working methodology with an example:
• Base item categories are assigned to Item categories
• Item categories are assigned to Business transaction variant.
• Business transaction variant is assigned to Business transactions
• Both business transaction and variant are assigned to splitting method.
Document splitting – Error handling situation -
Example

1) Pass an entry in FB50 by debit to main bank account

1031100840 and credit to incoming bank account 1031100841
– (Example for GL account not assigned to Item Category)

2) Pass an entry in FB50 by debit to expense and credit to cash

account with document type “IG” – (Example for document
type not assigned to Business transaction)

3) Pass an entry in F-41 to transfer vendor account A balance to

vendor
account B balance (simple balance transfer) (Example for not
assigning constants)
1) Document splitting – Error handling situation
(GL account not assigned to Item category)
2) Document splitting – Error handling situation
(Document type not assigned to Business transaction)
3) Document splitting – Error handling situation
(Profit center not filled / Derived due to constants not assigned)
Document splitting – Important points to be noted
• We cannot activate the document splitting subsequently or deactivate it temporarily (in
general, or for individual company codes).

• We cannot temporarily deactivate required entry fields or subsequently activate them in the
document splitting (like Profit center, Business area and segments). Example deactivating zero
balance clearing check or mandatory flag check, if it is already activated.

Example: The gross invoice (vendor, GL account, tax) was posted beforehand without required
entry field control of a characteristic in the document splitting. At the time of posting, the GL
account was not assigned with the characteristics that is now declared as a required entry field.
The required account assignment of the vendor line item, which is referenced in the subsequent
process (for example, payments, clearing or reversals) is missing. The subsequent process
cannot be posted as a result of the error message.

• We cannot activate the open item management of an account subsequently. In particular, we

cannot convert the documents that are already posted. The required information is not created for
the document splitting, which means that the item now open in this account cannot be cleared.

• A subsequent change of the classification for the document types may lead to inconsistent in
account assignments.

• Changing the zero balance clearing accounts or the account key may lead to inconsistencies
when we carry out a reversal for the document. Since the account determination is processed for
the clearing accounts when we make reversal postings, an account that deviates from the original
document is posted to during the reversal.
Document Splitting - Conclusion
SAP delivered configurations for document splitting rules in standard document splitting
methods can serve only as a guide and can work only for standard business processes.
In any SAP implementation, there may be certain scenarios or posting rules which is
customer specific or non-standard. In such cases, it may necessitate creation of
Custom document splitting methods and associated rules and doing necessary
modifications only in the Own-defined splitting method. SAP standard configurations
should not be changed.

Note – SAP Note Numbers relating to Document splitting

Please refer the following SAP note numbers in order to have a complete
knowledge in Document splitting functionality

- 1085921 (new GL document splitting) and

- 891144 (risks involved in subsequent changes in Document splitting)
5. Parallel ledger concept
Parallel Valuation - Overview
Parallel Financial reporting:

• Parallel financial reporting means that a company's financial statements have to

be created in accordance with different accounting rules. This is because a local
view (=> by U.S. GAAP in the U.S.) is no longer sufficient in a globalized world of
creditors (banks, shareholders) and business partners. An internationally
recognized account standard is increasingly in demand.

• Examples of internationally recognized accounting rules include:

- IAS/IFRS
- US GAAP

• Parallel valuation approach can be modeled in three ways in SAP:

- Creating a different company code for different valuation approach
- Creating additional GL accounts in the same COA
- Creating Parallel ledgers using same GL accounts in COA – also called as ledger
solution in SAP

With New General Ledger in place, Ledger solution can be the most effective
solution approach to address parallel accounting requirements.
Parallel Valuation – Ledger concept
New General Ledger accounting uses the ledgers known from the application component FI-SL to
save totals values. It consists of two ledgers, namely:
- Leading Ledger
- Non Leading Ledger

Leading Ledger:
For each client, there is a leading ledger to which all company codes are assigned. This ledger should
contain the group valuation view. Leading ledger is based on the same accounting principle as that of
the consolidated financial statement. It is integrated with all subsidiary ledgers and is updated in all
company codes. It automatically receives the settings that apply to the company code like the local
currency (and also additional currencies) that are assigned to the company code, uses the same fiscal
year variant and posting period variant that are assigned to the company code.

Non Leading Ledger:

We can also create additional ledgers called as non-leading ledgers for each company code. By
having different characteristic values and fiscal year definitions, these additional ledgers can be used
for different purposes, such as for parallel accounting or for management reporting.

In short, non leading ledgers are parallel ledgers to the leading ledger. We can use these different
ledgers, for example, to model different accounting rules for parallel valuation

Example: Leading Ledger – Local GAAP requirement and Non leading ledger – US GAAP or IAS or
UK GAAP.
Parallel valuation – Ledger concept

Customization steps

• Define Ledgers for general ledger accounting

• Define currencies of leading ledger

• Define and Activate non leading ledgers

• Assign scenarios to ledgers

• Define ledger group

1) Define Ledgers for general ledger accounting

Overview: SAP provides the Leading ledger “0L” by default with the standard system
and assigned to the summary table FAGLFLEXT by default.
Similar to leading ledger, non leading ledgers need to be created in this step.

Path: Customization -> Financial accounting (new) -> Financial accounting basic settings
(new) -> Ledgers -> Define Leading ledger.
2) Define currencies of Leading ledger

Overview: It takes the first currency as the company code currency by default. If there is
any requirement for additional currencies for leading ledgers, it can be created in this
path.

Path: Customization -> Financial accounting (new) -> Financial accounting basic settings
(new) -> Ledgers -> Define currencies of leading ledger
3) Define and activate Non leading ledgers
Overview: In this step, similar to leading ledger, company code currency is assigned by
default to non leading ledger. Additional currencies can be created; different fiscal year
variant and posting period variant can also be assigned in this step

Path: Customization -> Financial accounting (new) -> Financial accounting basic settings
(new) -> Ledgers -> Define and activate non-leading ledgers
4) Assign scenarios to ledgers
Scenario definition:

• A scenario defines which fields are updated in the ledgers (in the general ledger view) during
posting. The fields that are updated by the scenarios can be used to model certain business
circumstances – such as segmental reporting.

• There are 6 standard scenarios provided by SAP, namely:

– Cost center update (FIN_CCA)
– Preparations for consolidation (FIN_CONS)
– Business area (FIN_GSBER)
– Profit center update (FIN_PCA)
– Segmentation (FIN_SEGM)
– Cost-of-sales accounting (FIN_UKV)

• Depending on this scenario assignment in leading and non-leading ledgers and based on the
document splitting concept, the above fields will be updated in the general ledger view during
document posting and also updated in the general ledger tables for reporting purposes.

• Note 1: We cannot define our own scenarios

• Note 2: A leading and non leading ledger can be assigned one or more scenarios, or even all six
at once.

Path: Customization -> Financial accounting (new) -> Financial accounting basic settings (new) ->
Ledgers -> Assign scenarios and customer fields to ledgers.
Assign Scenarios to Leading and Non leading ledgers
5) Define Ledger group
Ledger group definition: It defines the representative ledger in a group. It’s a ledger
within a ledger group that is used to determine and check the posting period during
postings i.e. whether posting period is determined and whether the posting period is open
etc. In case of non-leading ledgers, multiple ledgers can be assigned to a single ledger
group, but only one ledger can be assigned as a representative ledger for that ledger
group.

Path: Customization -> Financial Accounting (New) -> Financial accounting basic
settings (new) -> Ledgers -> Define ledger group.
Parallel Ledger – For primary processes

Primary Processes
Invoices, Payments, …
Creation of one document
for all parallel ledgers

Accounting Interface

Online split, substitution, …

Fiscal year variant and subset

of dimensions may differ per
ledger.

Ledger 0L Ledger N1
Parallel Ledger – For Secondary processes
Secondary Processes, e.g. L.GAAP Secondary Processes, US GAAP
Currency Valuation, Currency Valuation,
Regrouping etc., Regrouping etc.,

Creation of parallel documents,

separate documents per ledger

Accounting Interface Accounting Interface

Online split, substitution, … Online split, substitution, …

Full parallel accounting: different

settings for valuation, fiscal year
variant, selected dimensions,

Ledger 0L Ledger N1
Parallel valuation using Parallel Ledgers - Examples

• Foreign currency valuation with different accounting principles

• Valuation of Fixed assets

• Regrouping of Receivables and Payables

• Individual value adjustments

• Passing accruals and deferrals

• Provision entries

• Reporting of P&L statement (Period & COS accounting)

• Valuation of Stock
Parallel Ledgers – Postings to all Ledgers individually
through FB01L / FB50L transaction code
In new GL, it is possible to post accruals / journal vouchers specific to a particular ledger.
SAP has created new easy access transactions which allow users to key in the ledger
group at the time of posting. If ledger group is not specified at the time of transaction
processing, it will be posted to all the defined ledgers. Example: Incoming invoice,
Outgoing invoice, Payments etc.
Parallel Ledgers – Postings to all Ledgers through FB01L /
FB50L
Open item management cannot be posted per individual ledger.
Example: Incoming Bank account which is managed on open item basis cannot be
posted only to non-leading ledger N1.
Ledger wise Provision / Accruals

Leading ledger view: Non-leading ledger view:

Parallel Ledger – Valuation of Fixed Assets
Overview:
Conventionally parallel accounting in fixed assets is handled by having multiple
depreciation areas and each of the depreciation area posting to different range of
accounts in Chart of accounts. With parallel ledger functionality in New GL, this gets
simple and can be handled now by using parallel ledgers.

Purpose:
To show how fixed asset transactions like depreciation, retirements etc. are
valuated separately in different ledgers using the same GL accounts.

Customization steps:
• Assign book depreciation area to leading ledger group
• Assign parallel depreciation area to non leading ledger group
• Create delta depreciation area (to post the difference in amount that arises
between book and parallel depreciation area).

Path:
Customization -> Financial accounting (New) -> Asset accounting -> Valuation ->
Depreciation areas -> Set up areas for parallel valuation.
Valuation of Fixed Assets - Example
Example for real and derived depreciation areas:

• Assign master area (book depreciation) to ledger setup

Example: Assign Book Depreciation 01 to leading ledger 0L
• Enter Depreciation area for parallel valuation to non leading ledgers – (N1)
Example: Assign Depreciation area 60 to Non leading ledger N1
• Create or select Delta area: This is mainly to post the difference that arises between
leading ledger depreciation area with non leading ledger depreciation area.
Example: Assign Depreciation area 61 to Non leading ledger N1
Here Depreciation area 61 is a derived depreciation from 01 and 60 depreciation areas.

Example to illustrate parallel accounting process using leading and non leading ledgers:

1) Fixed Asset Acquisition and Depreciation:

• Acquisition cost: 20,000 INR (will be recorded in both the books using same GL accounts)
• Book Depreciation (01) – 10% depreciation per annum
• Parallel ledger depreciation area (60) – 20% depreciation per annum

2) Fixed Asset Retirements and subsequent Gain / Loss on retirement:

• Retirement revenue – 17,000 INR
• Gain/loss on sale of asset in Non leading ledger will be recorded through Delta
depreciation area (61)
Parallel Valuation in Fixed Assets – Customization
Procedure
1) Assignment of Book Depreciation to Leading
Ledger 0L
2) Assignment of Parallel Depreciation area to Non
leading ledger N1
3) Assignment of Delta Depreciation area to Non
leading ledger N1

Purpose of creating Delta Depreciation area: For an example, during asset retirement,
the same accounting entry will be posted both in book depreciation as well as in parallel
depreciation area. Delta depreciation area is required mainly to adjust the gain / loss on
retirement in line with the original cost and accumulated depreciation posted in parallel
depreciation area.
4) Overview of settings
5) Complete – to update the procedure in database
Example: Acquisition and Depreciation
Example 1: Acquisition and Depreciation: Purchase of Fixed asset for INR 20,000.
Since it doesn’t have any specific ledger group assignment during document processing,
it would be posted to both leading and non-leading ledger.

- In 01 book depreciation we will have 20,000 INR as cost and 2,000 INR as accumulated
depreciation for the entire year from 01.04.08 to 31.03.09
- In 60 US GAAP (parallel valuation), we will have 20,000 INR as cost and 4,000 INR as
accumulated depreciation for the entire year from 01.04.08 to 31.03.09
Asset Explorer view – Book depreciation and parallel
depreciation area
Example: Retirement of an asset
Gain and Loss Calculation on retirement - In 01 Book
Depreciation area
Cost – INR 20,000
Accumulated depreciation for the entire year – INR 2,000
Retirement revenue – INR 17,000
Net Loss – INR 1,000
Gain and Loss Calculation on retirement - In 60 Parallel
Depreciation area
Cost – INR 20,000
Accumulated depreciation for the entire year – INR 4,000
Retirement revenue – INR 17,000
Net Gain – INR 1,000 (workings in the coming slides)

This will be posted in non leading ledger through delta depreciation area 61 (US GAAP
Adjustment). The below entry should read in line with the original accumulated depreciation
and retirement posting.
Net Gain calculation in Parallel depreciation area (60) through
derived / delta depreciation area (61):

Refer in line with the highlighted entries for more clarity

1) Accounting entry for depreciation:

Debit P&L Depreciation 4,000
Credit Accumulated Depreciation 4,000

2) Accounting entry for Retirement (posted in both the ledgers)

Debit Accumulated Depreciation 2,000
Debit Clearing account rev from asset sale 17,000
Debit Loss from asset sale 1,000
Credit Original cost 20,000

3) Accounting entry through delta depreciation area (61) – posted for parallel
depreciation area (60)
Debit Accumulated Depreciation 2,000
(Mainly to equalize the accumulated depreciation to INR 4,000 in line with Point no.1 & 2
entries)
Credit Loss from asset sale 1,000
(As there is only a gain, this entry is mainly to nullify the loss from asset sale in point no.2
entry)
Credit Gain from asset sale 1,000
Asset Explorer – Parallel Depreciation Area (60)
6. Segment Reporting & New GL
Assessment (Allocations)
Segment reporting - Overview
Overview:

The segment field is one of the standard account assignment objects available in SAP to run
analysis for “objects” below company code level. Segments can be used to meet international
accounting rules (namely IAS / IFRS / US GAAP).

It simplifies the reporting options in the new general ledger and eliminates the requirement of
having a separate PCA / special purpose ledger. This has also helped in reducing many
complex month end transactions like balance sheet re-adjustment, transfer of payables /
receivables in PCA etc. As per International Financial Reporting Standards (IFRS) reporting
Financial information by line of business and by geographical area, which is known as segment
reporting compliance can be met in SAP through Segment functionality.

Segment Derivation:

• Derive through profit center by assigning in profit center master data.

• Passing a JV using segments (directly assigning the segment at document processing

level itself)

• Derive through BADi (FAGL_DERIVE_SEGMENT).

Segment reporting – Deriving a segment - Steps
Perform the following steps in order to post, analyze and display
segments in documents in new General Ledger

• Define the segment.

Path: SPRO -> Enterprise Structure -> Financial Accounting -> Define segment.

• Define the scenarios: The scenario segmentation has to be defined for the leading ledger
(and possibly for other non-leading ledgers).

• Derive the segment. Segment can be derived in three ways:

SAP recommendation on usage of segments:

• The usage of segment has been officially released by SAP in connection with the usage of
profit centers only – Refer SAP note number 1035140.

• Postings are automatically made to the segment when the profit center is posted to.

• If the profit center does not have a segment, there is no segment account assignment
either. Once segment is assigned to a profit center, the segment field will turn into
“display mode”.
Deriving a segment through Profit center – Example
Segment Reporting
a) Through Financial statement version (transaction code S_PL0_86000028).
Example: Display of GL account balances for SEGMENT 1.
Segment Reporting
b) Display segment wise line item balances (transaction code FAGLL03). Click dynamic
selection and select the respective segments in ranges. Also customized reports can be
created through report painter / writer.
Allocations in FI
Purpose:

In new GL, cost allocations (Assessment as well as Distribution method of

allocation) can be executed within FI module. Allocations enable periodic allocation
of amounts and quantities from sender objects to receiver objects.

SAP recommends performing assessments and distributions at the cost center

level in Overhead Cost Controlling (CO-OM) and we need to use the allocation in
General Ledger accounting for assessments and distributions for the characteristics
At Segment and Profit Center level.

Reason:

Because the new GL includes model profit center accounting, allocations can be
carried out for example to distribute “overhead costs” (Cafeteria expenses,
electricity, water etc.,) from one profit center (such as the dummy PC) to another at
the end of the period”
Front end Navigation path
Assessment Cycle – Example – FAGLGA11

Note: Unlike CO, secondary cost element is not required and direct GL account can
be given which will serve as an assessment account.
Allocation cycle – Example
Allocation cycle run – FAGLGA15